EBay Beats Q4 Profit, Sales Views: Q1 Outlook Off

EBay (EBAY) shares were up 2% after hours Wednesday, after the online auction king reported fourth-quarter sales and profit that beat analyst views on strong gains in its PayPal and core marketplaces businesses.

The company's Q1 outlook fell below estimates, but investors seemed to shrug it off. Analysts say it was conservative guidance in response to the euro zone crisis and some related currency issues.

San Jose, Calif.-based eBay posted per-share profit of 60 cents, excluding items, for the quarter. That's up 15.4% from the year-earlier quarter and 3 cents above the consensus estimate of 34 analysts polled by Thomson Reuters. Net profit of $1.51 per share was up 260%, reflecting a gain on the sale of the company's remaining investment in its Skype Internet phone service.

EBay CEO John Donahoe, here speaking at October's Web. 2.0 Conference, on Wednesday said the company "had a strong close to the year." AP View Enlarged Image

Sales surged 35% to $3.4 billion, edging views of $3.32 billion.

For the full year, eBay said profit minus items rose 17% to $2.03 per share. Revenue jumped 27% to $11.7 billion, the company's biggest percentage gain since 2007.

For full year 2012 eBay sees EPS minus items of $2.25-$2.30, up 12% at the midpoint. It expects revenue of $13.7 billion to $14 billion, which would be up 19% at the midpoint.

"We had a strong close to the year. All of our businesses performed well," eBay Chief Executive John Donahoe said in a conference call with analysts.

PayPal, the No. 1 online payments service, saw sales surge 28% to $1.24 billion. Donahoe said global revenue from PayPal exceeded U.S. revenue for the first time, but he didn't give figures. He said this reflects PayPal's "growing footprint" and growth in emerging markets.

EBay's revenue outside the U.S. rose 25% in Q4, to $1.71 billion. U.S. sales jumped 49% to $1.67 billion.

Revenue for eBay's marketplaces unit, which includes its auctions business, rose 16% to $1.77 billion. Gross merchandise volume, the value of all goods and services sold on eBay excluding vehicles, rose 10% to $16.5 billion.

"EBay continues to do a solid job of executing and delivering results," said Scott Kessler, an equity analyst at S&P Capital IQ. Kessler says eBay's core marketplaces business continues to face challenges and competition, while PayPal seems to be doing quite well.

Kessler says a long-term issue for eBay is whether PayPal growth can offset what he says will likely be slowing growth in the marketplaces business. While eBay's been turning around marketplaces under a restructuring program, Kessler questions whether the company can keep squeezing sales and profits from the effort.

Citigroup analyst Mark Mahaney wrote in a Jan. 13 report that fallout from the euro zone crisis and a stronger dollar limited eBay's upside in Q4. He says these factors are also pushing eBay to provide cautious 2012 guidance.

Mahaney says eBay got a lift in the holiday quarter from positive U.S. online traffic trends. He says visitors to eBay.com as well as its other sites such as PayPal, StubHub, Shopping.com and eBayClassifieds.com rose 7% from a year earlier. That's up from 6% visitor growth in Q3.

"We saw a really good result for eBay, especially in December," said ChannelAdvisor CEO Scot Wingo.

EBay shares slipped as much as 4% in early January after Scott Thompson, the head of its PayPal unit, left to become Yahoo's (YHOO) new CEO. But Donahoe soothed worries about PayPal in a Jan. 12 speech at the Consumer Electronics Show in Las Vegas. He forecast that PayPal's mobile payment volume will surge 75% this year.

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07/28/2015 06:52 PM ET

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